Televisa case heads to trial

Media co. attempted to break contract with Univision

MEXICO CITY Mexican media conglom Televisa’s bid to break its contract with Univision Communications is heading to trial after a judge rejected claims by Univision that there was insufficient evidence to justify ending the webs’ partnership.

L.A. based U.S. District Court Judge Philip S. Gutierrez denied Univision’s request Monday for a summary judgment to prevent the lawsuit from heading to a jury trial in March. Gutierrez ruled there was sufficient evidence to warrant a jury trial over Televisa’s claims that Univision acted in “bad faith” in dealing with its Mexican partner.

Should Televisa prevail in the trial, it will be able to end its programming and licensing agreement (PLA) with Univision that supplies the U.S. net with Televisa’s hit prime-time telenovelas. Televisa could then renegotiate a greater share of royalties for its shows, or condition the supply of its content on gaining an equity stake in Univision. Televisa could also sell its content to Univision’s competitor NBC-owned Telemundo.

“This ruling clears the way for Televisa to reach its objective of terminating the PLA,” Marshall Grossman, a lawyer at Bingham McCutchen, Televisa’s legal rep, said in a telephone interview Friday. “The judge’s rhetoric was quite strong, saying a reasonable jury could conclude there was material breach.”

A Univision spokesman stressed the decision was only a “preliminary ruling.”

“We remain confident in our position and that Univision will prevail when we have the opportunity to present our case,” the spokesman said.

Televisa’s suit, filed in 2005 and bolstered by subsequent filings, seeks to end the PLA struck in 1992 and slated to end in 2017. Televisa argues Univision failed to pay it more than $100 million in royalties, altered Televisa’s content without its permission, and refused Televisa auditors prompt access to Univison’s financial records in order to insure that Univision was paying the Mexican web its due.

Judge Gutierrez ruled Televisas claim was “replete” with evidence that a jury could interpret as a possible “bad faith” breach of the contract. The trial is set for March 18.

Televisa’s beef with Univision dates back to the tumultuous relationship between Televisa management and Univision’s former owner, A. Jerold Perenchio. Televisa feels it has been gypped by the terms of the agreement as the U.S. Hispanic market has grown and Emilio Azcarraga Jean wanted to gain control of the net when Perenchio put Univision up for auction in 2006.

But Televisa was beat out by a group of private equity firms lead by media mogul Haim Saban.